I covered this in the most recent Facebook HR Strategy Session but since everyone has different learning styles, I thought it's an important topic to cover in a blog as well!
Many small businesses start off by hiring Independent Contractors as they grow their business rather than committing to all that comes along with having an employees. Classifying your contacts correctly is a separate challenge in itself and you definitely want to consult a tax accountant however if you work mostly with Independent Contractors or 1099 individuals, this post is for you.
HR exists when there is an employee - employer relationship but it ALSO exists when there is a business - independent contractor relationship. Here's a few HR things to consider when establishing business relationships.
HR is often thought of as the compliance center but when it comes to independent contractors, there's areas of compliance you need to be aware of as well. You definitely want to make sure you have a W9 for all independent contractors you do business with. This will make things less frantic when it comes to tax time and your tax accountant will thank you.
Hiring independent contractors in itself helps businesses avoid risk, for example, you don't have to be concerned with Workers Compensation, Unemployment or a wrongful termination lawsuit however there's certain risks that are involved when bringing on a 1099 individual.
Always make sure that the independent contractors have insurance whether that's liability insurance or E&O coverage. Also, never do business without a contract. NEVER, EVER, EVER.
Just as you need to pay employees on time, pay your contractors on time. Treat your 1099's with respect, be respectful of their time. Practicing good "contractor relations" will make for better relationships with the people that serve your business.